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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K/A
 (Amendment No. 1)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the Fiscal Year Ended December 31, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period from  to
 Commission File Number 0-13546
 APACHE OFFSHORE INVESTMENT PARTNERSHIP
 A Delaware 
General Partnership
    
    IRS Employer
No. 41-1464066
 
  
 o þ
 o þ
 þ o
 o
  o o þ
 o þ




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EXPLANATORY NOTE




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##### 



TABLE OF CONTENTS
 DESCRIPTION
 Item
    
    PagePART I1. BUSINESS
    
    
    11A. RISK FACTORS
    
    
    31B. UNRESOLVED STAFF COMMENTS
    
    
    42. PROPERTIES
    
    
    53. LEGAL PROCEEDINGS
    
    
    64. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    6PART II5. MARKET FOR THE PARTNERSHIPS SECURITIES AND RELATED
SECURITY HOLDER MATTERS
    
    
    76. SELECTED FINANCIAL DATA
    
    
    77. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    
    
    87A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    138. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    159. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    339A. CONTROLS AND PROCEDURES
    
    
    339B. OTHER INFORMATION
    
    
    33PART III10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
    
    
    3411. EXECUTIVE COMPENSATION
    
    
    3412. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
    
    
    3413. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    
    
    3414. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    34PART IV15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
    
    
    35Certification of CEOCertification of CFOCertification of CEO and CFO




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PART I
 
 ITEM 1. BUSINESS
 General
        1




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2005 Results and Business Development
     Marketing
     2




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ITEM 1A. RISK FACTORS
  Partnerships Profitability is Highly Dependent on the Prices of Crude Oil, Natural Gas and Natural
Gas Liquids, which have Historically been very Volatile
  Drilling Activities may not be Productive
  
    
    unexpected drilling conditions;
    
    pressure or irregularities in formations;
    
    equipment failures or accidents;
    
    fires, explosions, blow-outs and surface cratering;
    
    marine risks such as capsizing, collisions and hurricanes;
    
    other adverse weather conditions; and
    
    shortages or delays in the delivery of equipment.
  Uncertainty in Calculating Reserves; Rates of Production; Development Expenditures; Cash Flows
  Costs Incurred Related to Environmental Matters
  3




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Insurance Does Not Cover All Risks
  Industry Competition
  Investors In The Partnerships Securities May Encounter Difficulties In Obtaining, Or May Be Unable
To Obtain, Recoveries From Arthur Andersen With Respect To Its Audits Of Our Financial Statements
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  4




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ITEM 2. PROPERTIES
 Acreage
  Developed AcreageLease Block
    
    State
    
    Gross Acres
    
    Net AcresShip Shoal 258, 259
    
    LA
    
    
    10,141
    
    
    
    638South Timbalier 276, 295, 296
    
    LA
    
    
    15,000
    
    
    
    1,063North Padre Island 969, 976
    
    TX
    
    
    10,080
    
    
    
    714Matagorda Island 681, 682, 683
    
    TX
    
    
    15,840
    
    
    
    742Ship Shoal 201, 202
    
    LA
    
    
    10,000
    
    
    
    61,061
    
    
    
    3,157
  Productive Oil and Gas Wells
  Gas
    
    OilLease Block
    
    State
    
    Gross
    
    Net
    
    Gross
    
    NetShip Shoal 258, 259
    
    LA
    
    
    9
    
    
    
    .57
    
    
    
    
    
    
    
    South Timbalier 276, 295, 296
    
    LA
    
    
    1
    
    
    
    .07
    
    
    
    33
    
    
    
    2.34North Padre Island 969, 976
    
    TX
    
    
    4
    
    
    
    .28
    
    
    
    
    
    
    
    Matagorda Island 681, 682,
683
    
    TX
    
    
    3
    
    
    
    .19
    
    
    
    
    
    
    
    Ship Shoal 201, 202
    
    LA
    
    
    1
    
    
    
    
    
    
    
    1
    
    
    
    18
    
    
    
    1.11
    
    
    
    34
    
    
    
    2.34
 Net Wells Drilled
  Net Exploratory
    
    Net DevelopmentYear
    
    Productive
    
    Dry
    
    Total
    
    Productive
    
    Dry
    
    Total2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    .13
    
    
    
    .06
    
    
    
    .192004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    .30
    
    
    
    
    
    
    
    .302003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 5




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Production and Pricing Data
  Production
    
    
    
    
    
    Average Sales PricesAverageYear Ended
    
    Oil
    
    Gas
    
    NGLs
    
    Production
    
    Oil
    
    Gas
    
    NGLsDecember 31,
    
    (Mbbls)
    
    (MMcf)
    
    (Mbbls)
    
    Cost per Mcfe
    
    (per Bbl)
    
    (per Mcf)
    
    (per Bbl)2005
    
    
    74
    
    
    
    1,158
    
    
    
    18
    
    
    $
    .78
    
    
    $
    53.91
    
    
    $
    8.78
    
    
    $
    33.982004
    
    
    110
    
    
    
    1,398
    
    
    
    26
    
    
    
    .48
    
    
    
    40.62
    
    
    
    6.23
    
    
    
    26.842003
    
    
    125
    
    
    
    1,432
    
    
    
    6
    
    
    
    .42
    
    
    
    30.73
    
    
    
    5.56
    
    
    
    23.92
  Estimated Proved Reserves and Future Net Cash Flows
      
 ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  6




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PART II
 
 ITEM 5. MARKET FOR THE PARTNERSHIPS SECURITIES AND RELATED SECURITY HOLDER MATTERS
   
 ITEM 6. SELECTED FINANCIAL DATA
  As of or For the Year Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(In thousands, except per Unit amounts)Total assets
    
    $
    11,624
    
    
    $
    12,215
    
    
    $
    11,674
    
    
    $
    9,834
    
    
    $
    9,413Partners capital
    
    $
    10,311
    
    
    $
    11,293
    
    
    $
    10,475
    
    
    $
    9,610
    
    
    $
    8,369Oil and gas sales
    
    $
    14,779
    
    
    $
    13,874
    
    
    $
    11,951
    
    
    $
    6,868
    
    
    $
    10,495Net income
    
    $
    11,048
    
    
    $
    9,591
    
    
    $
    8,037
    
    
    $
    3,524
    
    
    $
    7,264Net income allocated to:Managing Partner
    
    $
    2,555
    
    
    $
    2,407
    
    
    $
    2,037
    
    
    $
    1,036
    
    
    $
    1,731Investing Partners
    
    
    8,493
    
    
    
    7,184
    
    
    
    6,000
    
    
    
    2,488
    
    
    
    5,533$
    11,048
    
    
    $
    9,591
    
    
    $
    8,037
    
    
    $
    3,524
    
    
    $
    7,264Net income per Investing
Partner Unit
    
    $
    8,048
    
    
    $
    6,786
    
    
    $
    5,598
    
    
    $
    2,259
    
    
    $
    4,922Cash distributions per
Investing Partner Unit
    
    $
    9,000
    
    
    $
    6,000
    
    
    $
    4,500
    
    
    $
    1,000
    
    
    $
    4,000
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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Overview
      Results of Operations
  Net Income and Revenue
  8




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For the Year Ended December 31,2005
    
    2004
    
    2003Gas volumes  Mcf per day
    
    
    3,172
    
    
    
    3,820
    
    
    
    3,924Average gas price  per Mcf
    
    $
    8.78
    
    
    $
    6.23
    
    
    $
    5.56Oil volumes  barrels per day
    
    
    203
    
    
    
    301
    
    
    
    342Average oil price  per barrel
    
    $
    53.91
    
    
    $
    40.62
    
    
    $
    30.73NGL volumes  barrels per day
    
    
    51
    
    
    
    71
    
    
    
    16Average NGL price  per barrel
    
    $
    33.98
    
    
    $
    26.84
    
    
    $
    23.92
   Natural Gas Sales
    Crude Oil Sales
  9




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Operating Expenses
     Capital Resources and Liquidity
    10




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Capital Commitments
     11




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Off-Balance Sheet Arrangements
  Critical Accounting Policies and Estimates
  Full Cost Method of Accounting for Oil and Gas Operations
   12




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Reserve Estimates
    Asset Retirement Obligation
    
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Commodity Risk
  13




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Governmental Risk
  Weather and Climate Risk
  Forward-Looking Statements and Risk
   14




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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 APACHE OFFSHORE INVESTMENT PARTNERSHIP
INDEX TO FINANCIAL STATEMENTS
 PageNumberReport of Independent Registered Public Accounting Firm
    

    16Statement of Consolidated Income for each of the three years in the period ended December 31,
2005
    

    17Statement of Consolidated Cash Flows for each of the three years in the period ended
December 31, 2005
    

    18Consolidated Balance Sheet as of December 31, 2005 and 2004
    

    19Statement of Consolidated Changes in Partners Capital for each of the three years in the period
ended December 31, 2005
    

    20Notes to Consolidated Financial Statements
    

    21Supplemental Oil and Gas Disclosures
    

    30Supplemental Quarterly Financial Data
    

    32
   15




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
     ERNST & YOUNG LLP
 
 16




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APACHE OFFSHORE INVESTMENT PARTNERSHIP
 
 STATEMENT OF CONSOLIDATED INCOME
 For the Year Ended December 31,2005
    
    
    2004
    
    
    2003REVENUES:Oil and gas sales
    
    $
    14,778,653
    
    
    $
    13,873,998
    
    
    $
    11,950,908Interest income
    
    
    99,970
    
    
    
    39,087
    
    
    
    27,081Other revenue
    
    
    
    
    
    
    
    
    
    
    14,56714,878,623
    
    
    
    13,913,085
    
    
    
    11,992,556OPERATING EXPENSES:Depreciation, depletion and amortization
    
    
    2,039,571
    
    
    
    2,816,528
    
    
    
    2,875,896Asset retirement obligation accretion
    
    
    45,672
    
    
    
    48,744
    
    
    
    37,605Lease operating costs
    
    
    1,159,366
    
    
    
    918,337
    
    
    
    818,636Gathering and transportation expense
    
    
    169,114
    
    
    
    135,263
    
    
    
    121,067Administrative
    
    
    417,000
    
    
    
    403,000
    
    
    
    405,0003,830,723
    
    
    
    4,321,872
    
    
    
    4,258,204Operating income before cumulative effect of
change in accounting principle
    
    $
    11,047,900
    
    
    $
    9,591,213
    
    
    $
    7,734,352Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    302,407NET INCOME
    
    $
    11,047,900
    
    
    $
    9,591,213
    
    
    $
    8,036,759NET INCOME ALLOCATED TO:Managing Partner
    
    $
    2,554,528
    
    
    $
    2,407,360
    
    
    $
    2,036,681Investing Partners
    
    
    8,493,372
    
    
    
    7,183,853
    
    
    
    6,000,078$
    11,047,900
    
    
    $
    9,591,213
    
    
    $
    8,036,759NET INCOME PER INVESTING PARTNER UNIT
    
    $
    8,048
    
    
    $
    6,786
    
    
    $
    5,598WEIGHTED AVERAGE INVESTING PARTNER
UNITS OUTSTANDING
    
    
    1,055.4
    
    
    
    1,058.6
    
    
    
    1,071.9
 
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APACHE OFFSHORE INVESTMENT PARTNERSHIP
 
 STATEMENT OF CONSOLIDATED CASH FLOWS
 For the Year Ended December 31,2005
    
    
    2004
    
    
    2003CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    11,047,900
    
    
    $
    9,591,213
    
    
    $
    8,036,759Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation, depletion and amortization
    
    
    2,039,571
    
    
    
    2,816,528
    
    
    
    2,875,896Asset retirement obligation accretion
    
    
    45,672
    
    
    
    48,744
    
    
    
    37,605Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    (302,407
    )Dismantlement and abandonment cost
    
    
    (167,767
    )
    
    
    (323,966
    )
    
    
    (254,134
    )Changes in operating assets and liabilities:(Increase) decrease in accrued revenues receivable
    
    
    (470,419
    )
    
    
    (324,111
    )
    
    
    (26,046
    )Increase (decrease) in accrued operating
expenses
    
    
    (3,204
    )
    
    
    11,693
    
    
    
    3,598Increase (decrease) in receivable from
Apache Corporation
    
    
    (191,796
    )
    
    
    (79,257
    )
    
    
    (210,169
    )Net cash provided by operating activities
    
    
    12,299,957
    
    
    
    11,740,844
    
    
    
    10,161,102CASH FLOWS FROM INVESTING ACTIVITIES:Additions to oil and gas properties
    
    
    (1,678,072
    )
    
    
    (1,570,794
    )
    
    
    (1,916,566
    )Increase (decrease) in accrued development costs
    
    
    551,324
    
    
    
    (334,740
    )
    
    
    282,927Proceeds from sales of oil and gas properties
    
    
    134,060
    
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (992,688
    )
    
    
    (1,905,534
    )
    
    
    (1,633,639
    )CASH FLOWS FROM FINANCING ACTIVITIES:Repurchase of Partnership Units
    
    
    (22,775
    )
    
    
    (55,881
    )
    
    
    (295,734
    )Distributions to Investing Partners
    
    
    (9,499,617
    )
    
    
    (6,350,335
    )
    
    
    (4,789,313
    )Distributions to Managing Partner
    
    
    (2,506,864
    )
    
    
    (2,366,949
    )
    
    
    (2,086,812
    )Net cash used in financing activities
    
    
    (12,029,256
    )
    
    
    (8,773,165
    )
    
    
    (7,171,859
    )NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
    
    
    (721,987
    )
    
    
    1,062,145
    
    
    
    1,355,604CASH AND CASH EQUIVALENTS, BEGINNING
OF YEAR
    
    
    3,333,640
    
    
    
    2,271,495
    
    
    
    915,891CASH AND CASH EQUIVALENTS, END OF YEAR
    
    $
    2,611,653
    
    
    $
    3,333,640
    
    
    $
    2,271,495
 
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APACHE OFFSHORE INVESTMENT PARTNERSHIP
 
 CONSOLIDATED BALANCE SHEET
 December 31,2005
    
    
    2004ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    2,611,653
    
    
    $
    3,333,640Accrued revenues receivable
    
    
    1,435,740
    
    
    
    965,321Receivable from Apache Corporation
    
    
    357,270
    
    
    
    165,4744,404,663
    
    
    
    4,464,435OIL AND GAS PROPERTIES, on the basis of full cost accounting:Proved properties
    
    
    185,573,656
    
    
    
    184,065,602Less  Accumulated depreciation, depletion and amortization
    
    
    (178,354,788
    )
    
    
    (176,315,217
    )7,218,868
    
    
    
    7,750,385$
    11,623,531
    
    
    $
    12,214,820LIABILITIES AND PARTNERS CAPITALCURRENT LIABILITIES:Accrued development costs
    
    $
    551,324
    
    
    $
    Accrued operating expenses
    
    
    60,565
    
    
    
    63,769611,889
    
    
    
    63,769COMMITMENTS AND CONTINGENCIES (Note 7)ASSET RETIREMENT OBLIGATION
    
    
    700,154
    
    
    
    858,207PARTNERS CAPITAL:Managing Partner
    
    
    255,285
    
    
    
    207,621Investing Partners (1,053.4 and 1,055.7 Units
outstanding, respectively)
    
    
    10,056,203
    
    
    
    11,085,22310,311,488
    
    
    
    11,292,844$
    11,623,531
    
    
    $
    12,214,820
 
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##### Table of Contents



APACHE
OFFSHORE INVESTMENT PARTNERSHIP
 
 STATEMENT OF CONSOLIDATED CHANGES IN PARTNERS CAPITAL
 Managing Partner
    
    
    Investing Partners
    
    
    TotalBALANCE, DECEMBER 31, 2002
    
    $
    217,341
    
    
    $
    9,392,555
    
    
    $
    9,609,896Distributions
    
    
    (2,086,812
    )
    
    
    (4,789,313
    )
    
    
    (6,876,125
    )Repurchase of Partnership Units
    
    
    
    
    
    
    (295,734
    )
    
    
    (295,734
    )Net income
    
    
    2,036,681
    
    
    
    6,000,078
    
    
    
    8,036,759BALANCE, DECEMBER 31, 2003
    
    
    167,210
    
    
    
    10,307,586
    
    
    
    10,474,796Distributions
    
    
    (2,366,949
    )
    
    
    (6,350,335
    )
    
    
    (8,717,284
    )Repurchase of Partnership Units
    
    
    
    
    
    
    (55,881
    )
    
    
    (55,881
    )Net income
    
    
    2,407,360
    
    
    
    7,183,853
    
    
    
    9,591,213BALANCE, DECEMBER 31, 2004
    
    
    207,621
    
    
    
    11,085,223
    
    
    
    11,292,844Distributions
    
    
    (2,506,864
    )
    
    
    (9,499,617
    )
    
    
    (12,006,481
    )Repurchase of Partnership Units
    
    
    
    
    
    
    (22,775
    )
    
    
    (22,775
    )Net income
    
    
    2,554,528
    
    
    
    8,493,372
    
    
    
    11,047,900BALANCE, DECEMBER 31, 2005
    
    $
    255,285
    
    
    $
    10,056,203
    
    
    $
    10,311,488
 
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APACHE OFFSHORE INVESTMENT PARTNERSHIP
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (1)
    
    ORGANIZATION
 Nature
of Operations 
      21




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APACHE OFFSHORE INVESTMENT PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Right
of Presentment 
    Right of Presentment
    
    Total Repurchase
    
    Repurchase PriceValuation Date
    
    Price
    
    Per UnitDecember 31, 2002
    
    $
    13,612,220
    
    
    $
    12,047June 30, 2003
    
    
    14,345,895
    
    
    
    9,512December 31, 2003
    
    
    14,338,941
    
    
    
    11,518June 30, 2004
    
    
    13,730,918
    
    
    
    8,988December 31, 2004
    
    
    17,331,746
    
    
    
    12,418June 30, 2005
    
    
    15,131,715
    
    
    
    9,337
 2005
    
    
    2004
    
    
    2003Investing Partner Units Outstanding:Balance, beginning of year
    
    
    1,055.7
    
    
    
    1,060.7
    
    
    
    1,084.9Repurchase of Partnership Units
    
    
    (2.3
    )
    
    
    (5.0
    )
    
    
    (24.2
    )Balance, end of year
    
    
    1,053.4
    
    
    
    1,055.7
    
    
    
    1,060.7
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APACHE OFFSHORE INVESTMENT PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Capital Contributions 
  (2)
    
    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Statement Presentation 
  Cash Equivalents 
  Oil and Gas Properties 
     23




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APACHE OFFSHORE INVESTMENT PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Revenue Recognition 
  Net Income Per Investing Unit 
  Income Taxes 
  Use of Estimates 
  Receivable from Apache 
  Maintenance and Repairs 
  24




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APACHE OFFSHORE INVESTMENT PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Shipping and Handling Costs 
  (3)
    
    COMPENSATION TO APACHE
  Total Reimbursed by the Investing Partnersfor the Year Ended December 31,2005
    
    
    2004
    
    
    2003(In thousands)a.
    
    Apache is reimbursed for general, administrative and
overhead expenses incurred in connection with the
management and operation of the Partnerships business
    
    $
    334
    
    
    $
    322
    
    
    $
    324b.
    
    Apache is reimbursed for development overhead costs
incurred in the Partnerships operations. These costs are
based on development activities and are capitalized to
oil and gas properties
    
    $
    71
    
    
    $
    71
    
    
    $
    86
  25




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##### Table of Contents



APACHE OFFSHORE INVESTMENT PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (4)
    
    OIL AND GAS PROPERTIES
  2005
    
    
    2004
    
    
    2003(In thousands)Oil and Gas PropertiesBalance, beginning of year
    
    $
    184,066
    
    
    $
    182,174
    
    
    $
    179,657Costs incurred during the year:Development Investing Partners
    
    
    1,766
    
    
    
    1,841
    
    
    
    2,154Managing Partner
    
    
    44
    
    
    
    51
    
    
    
    37Asset retirement cost from adoption of
SFAS No. 143 Investing Partners
    
    
    
    
    
    
    
    
    
    
    323Managing Partner
    
    
    
    
    
    
    
    
    
    
    3Property sales Investing Partners
    
    
    (274
    )
    
    
    
    
    
    
    Managing Partners
    
    
    (28
    )
    
    
    
    
    
    
    Balance, end of year
    
    $
    185,574
    
    
    $
    184,066
    
    
    $
    182,174
 Managing
    
    
    InvestingPartner
    
    
    Partners
    
    
    Total(In thousands)Accumulated Depreciation, Depletion and AmortizationBalance, December 31, 2002
    
    $
    20,682
    
    
    $
    150,672
    
    
    $
    171,354Adoption of SFAS No. 143
    
    
    (7
    )
    
    
    (724
    )
    
    
    (731
    )Provision
    
    
    90
    
    
    
    2,786
    
    
    
    2,876Balance, December 31, 2003
    
    
    20,765
    
    
    
    152,734
    
    
    
    173,499Provision
    
    
    75
    
    
    
    2,741
    
    
    
    2,816Balance, December 31, 2004
    
    
    20,840
    
    
    
    155,475
    
    
    
    176,315Provision
    
    
    52
    
    
    
    1,988
    
    
    
    2,040Balance, December 31, 2005
    
    $
    20,892
    
    
    $
    157,463
    
    
    $
    178,355
  (5)
    
    MAJOR CUSTOMER AND RELATED PARTIES INFORMATION
   26




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##### Table of Contents



APACHE OFFSHORE INVESTMENT PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
      (6)
    
    FINANCIAL INSTRUMENTS
  (7)
    
    COMMITMENTS AND CONTINGENCIES
 Litigation 
 Environmental 
 (8)
    
    ASSET RETIREMENT OBLIGATION
  27




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APACHE OFFSHORE INVESTMENT PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
      2005
    
    
    2004Asset retirement obligation at beginning of period
    
    $
    858,207
    
    
    $
    812,520Liabilities incurred
    
    
    167,767
    
    
    
    Liabilities settled
    
    
    (336,100
    )
    
    
    (6,101
    )Accretion expense
    
    
    45,672
    
    
    
    48,744Revisions in estimated liabilities
    
    
    (35,392
    )
    
    
    3,044Asset retirement obligation at December 31
    
    $
    700,154
    
    
    $
    858,207
  (9) INSURANCE RECOVERIES
  28




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##### Table of Contents



APACHE OFFSHORE INVESTMENT PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 (10) TAX-BASIS FINANCIAL INFORMATION
  2005
    
    
    2004
    
    
    2003Net partnership ordinary income for federal income
tax reporting purposes
    
    $
    11,103,205
    
    
    $
    9,993,343
    
    
    $
    7,846,759Plus: Items of current (income) expense for tax reporting
purposes only Intangible drilling cost
    
    
    1,318,588
    
    
    
    1,457,967
    
    
    
    1,358,245Dismantlement and abandonment cost
    
    
    167,767
    
    
    
    6,101
    
    
    
    575,553Gain on sale of properties
    
    
    (134,060
    )
    
    
    
    
    
    
    Tax depreciation
    
    
    677,643
    
    
    
    999,074
    
    
    
    867,2962,029,938
    
    
    
    2,463,142
    
    
    
    2,801,094Less: full cost DD&A expense
    
    
    (2,039,571
    )
    
    
    (2,816,528
    )
    
    
    (2,875,896
    )Less: asset retirement obligation accretion
    
    
    (45,672
    )
    
    
    (48,744
    )
    
    
    (37,605
    )Plus: cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    302,407Net income
    
    $
    11,047,900
    
    
    $
    9,591,213
    
    
    $
    8,036,759
   December 31,2005
    
    
    2004Liabilities for federal income tax purposes
    
    $
    611,889
    
    
    $
    63,769Asset retirement liability
    
    
    700,154
    
    
    
    858,207Liabilities under accounting principles generally
accepted in the United States
    
    $
    1,312,043
    
    
    $
    921,976
  29




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##### Table of Contents



APACHE OFFSHORE INVESTMENT PARTNERSHIP
 
 SUPPLEMENTAL OIL AND GAS DISCLOSURES
 (UNAUDITED)
 Oil and Gas Reserve Information 
    2005
    
    
    2004
    
    
    2003Oil
    
    
    Gas
    
    
    Oil
    
    
    Gas
    
    
    Oil
    
    
    GasProved ReservesBeginning of year
    
    
    648
    
    
    
    5,244
    
    
    
    618
    
    
    
    5,992
    
    
    
    849
    
    
    
    6,339Extensions, discoveries and other additions
    
    
    4
    
    
    
    147
    
    
    
    32
    
    
    
    1,027
    
    
    
    12
    
    
    
    161Revisions of previous estimates
    
    
    83
    
    
    
    305
    
    
    
    134
    
    
    
    (377
    )
    
    
    (112
    )
    
    
    924Production
    
    
    (92
    )
    
    
    (1,158
    )
    
    
    (136
    )
    
    
    (1,398
    )
    
    
    (131
    )
    
    
    (1,432
    )End of year
    
    
    643
    
    
    
    4,538
    
    
    
    648
    
    
    
    5,244
    
    
    
    618
    
    
    
    5,992Proved DevelopedBeginning of year
    
    
    648
    
    
    
    5,140
    
    
    
    618
    
    
    
    5,883
    
    
    
    849
    
    
    
    6,230End of year
    
    
    643
    
    
    
    4,433
    
    
    
    648
    
    
    
    5,140
    
    
    
    618
    
    
    
    5,883
   30




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##### Table of Contents



APACHE OFFSHORE INVESTMENT PARTNERSHIP
SUPPLEMENTAL OIL AND GAS DISCLOSURES  (Continued)
(UNAUDITED)
 Future Net Cash Flows 
  Discounted Future Net Cash Flows Relating to Proved Reserves
 December 31,2005
    
    
    2004
    
    
    2003(In thousands)Future cash inflows
    
    $
    79,709
    
    
    $
    58,854
    
    
    $
    55,014Future production costs
    
    
    (7,962
    )
    
    
    (5,943
    )
    
    
    (5,645
    )Future development costs
    
    
    (3,485
    )
    
    
    (3,571
    )
    
    
    (3,789
    )Net cash flows
    
    
    68,262
    
    
    
    49,340
    
    
    
    45,58010 percent annual discount rate
    
    
    (26,666
    )
    
    
    (17,590
    )
    
    
    (14,995
    )Discounted future net cash flows
    
    $
    41,596
    
    
    $
    31,750
    
    
    $
    30,585
  For the Year Ended December 31,2005
    
    
    2004
    
    
    2003(In thousands)Sales, net of production costs
    
    $
    (13,451
    )
    
    $
    (12,820
    )
    
    $
    (11,011
    )Net change in prices and production costs
    
    
    15,482
    
    
    
    4,435
    
    
    
    3,731Extensions, discoveries and other additions
    
    
    1,616
    
    
    
    6,331
    
    
    
    1,247Development costs incurred
    
    
    65
    
    
    
    233
    
    
    
    490Revisions of quantities
    
    
    4,391
    
    
    
    1,644
    
    
    
    813Accretion of discount
    
    
    3,175
    
    
    
    3,059
    
    
    
    3,083Changes in future development costs
    
    
    (126
    )
    
    
    
    
    
    
    Changes in production rates and other
    
    
    (1,306
    )
    
    
    (1,717
    )
    
    
    1,407$
    9,846
    
    
    $
    1,165
    
    
    $
    (240
    )
 Impact of Pricing
  31




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##### Table of Contents



APACHE OFFSHORE INVESTMENT PARTNERSHIP
 
 SUPPLEMENTAL QUARTERLY FINANCIAL DATA
 (UNAUDITED)
 First
    
    
    Second
    
    
    Third
    
    
    Fourth
    
    
    Total(In thousands, except per Unit amounts)2005Revenues
    
    $
    3,398
    
    
    $
    3,366
    
    
    $
    3,154
    
    
    $
    4,961
    
    
    $
    14,879Expenses
    
    
    1,037
    
    
    
    899
    
    
    
    944
    
    
    
    951
    
    
    
    3,831Net income
    
    $
    2,361
    
    
    $
    2,467
    
    
    $
    2,210
    
    
    $
    4,010
    
    
    $
    11,048Net income allocated to:Managing Partner
    
    $
    568
    
    
    $
    571
    
    
    $
    515
    
    
    $
    901
    
    
    $
    2,555Investing Partners
    
    
    1,793
    
    
    
    1,896
    
    
    
    1,695
    
    
    
    3,109
    
    
    
    8,493$
    2,361
    
    
    $
    2,467
    
    
    $
    2,210
    
    
    $
    4,010
    
    
    $
    11,048Net income per Investing
Partner Unit (1)
    
    $
    1,698
    
    
    $
    1,797
    
    
    $
    1,606
    
    
    $
    2,947
    
    
    $
    8,0482004Revenues
    
    $
    3,257
    
    
    $
    3,180
    
    
    $
    3,454
    
    
    $
    4,022
    
    
    $
    13,913Expenses
    
    
    1,037
    
    
    
    1,052
    
    
    
    1,098
    
    
    
    1,135
    
    
    
    4,322Net income
    
    $
    2,220
    
    
    $
    2,128
    
    
    $
    2,356
    
    
    $
    2,887
    
    
    $
    9,591Net income allocated to:Managing Partner
    
    $
    564
    
    
    $
    545
    
    
    $
    604
    
    
    $
    694
    
    
    $
    2,407Investing Partners
    
    
    1,656
    
    
    
    1,583
    
    
    
    1,752
    
    
    
    2,193
    
    
    
    7,184$
    2,220
    
    
    $
    2,128
    
    
    $
    2,356
    
    
    $
    2,887
    
    
    $
    9,591Net income per Investing
Partner Unit (1)
    
    $
    1,561
    
    
    $
    1,494
    
    
    $
    1,657
    
    
    $
    2,075
    
    
    $
    6,786
 
 (1)
    
    The sum of the individual net income per Investing Partner Unit may not agree with
the year-to-date net income per Investing Partner Unit as each quarterly computation is
based on the weighted average number of Investing Partner Units during that period. 32




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##### Table of Contents



ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 Disclosure Control and Procedures
  Report on Internal Control Over Financial Reporting
  
 ITEM 9B. OTHER INFORMATION
  33




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##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
  Code of Business Conduct
  
 ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  34




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##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
 a. (1)
    
    Financial Statements  See accompanying index to financial statements in Item 8 above.(2)
    
    Financial Statement Schedules  See accompanying index to financial statements in Item
8 above.(3)
    
    Exhibits
 3.1
    
    Partnership Agreement of Apache Offshore Investment Partnership (incorporated
by reference to Exhibit (3)(i) to Form 10 filed by Partnership with the Commission
on April 30, 1985, Commission File No. 0-13546).3.2
    
    Amendment No. 1, dated February 11, 1994, to the Partnership Agreement
of Apache Offshore Investment Partnership (incorporated by reference to Exhibit 3.3
to Partnerships Annual Report on Form 10-K for the year ended December 31, 1993,
Commission File No. 0-13546).3.3
    
    Limited Partnership Agreement of Apache Offshore Petroleum Limited
Partnership (incorporated by reference to Exhibit (3)(ii) to Form 10 filed by
Partnership with the Commission on April 30, 1985, Commission File No. 0-13546).10.1
    
    Form of Assignment and Assumption Agreement between Apache Corporation
and Apache Offshore Petroleum Limited Partnership (incorporated by reference to
Exhibit 10.2 to Partnerships Quarterly Report on Form 10-Q for the quarter ended
June 30, 1992, Commission File No. 0-13546).10.2
    
    Joint Venture Agreement, dated as of November 23, 1992, between Apache
Corporation and Apache Offshore Petroleum Limited Partnership (incorporated by
reference to Exhibit 10.6 to Partnerships Annual Report on Form 10-K for the year
ended December 31, 1992, Commission File No. 0-13546).10.3
    
    Matagorda Island 681 Field Purchase and Sale Agreement with Option to
Exchange, dated November 24, 1992, between Apache Corporation, Shell Offshore, Inc.
and SOI Royalties, Inc. (incorporated by reference to Exhibit 10.7 to Partnerships
Annual Report on Form 10-K for the year ended December 31, 1992, Commission File No.
0-13546).23.1
    
    Consent of Ryder Scott Company, L.P., Petroleum Consultants (incorporated
by reference to Exhibit 23.1 to Partnerships Annual Report on Form 10-K for the
year ended December 31, 2005, Commission File No. 0-13546)*31.1
    
    Certification of Chief Executive Officer.*31.2
    
    Certification of Chief Financial Officer.*32.1
    
    Certification of Chief Executive Officer and Chief Financial Officer.99.1
    
    Consent statement of the Partnership, dated January 7, 1994 (incorporated
by reference to Exhibit 99.1 to Partnerships Annual Report on Form 10-K for the
year ended December 31, 1993, Commission File No. 0-13546).99.2
    
    Proxy statement to be dated on or about March 27, 2006, relating to the
2006 annual meeting of stockholders of Apache Corporation (incorporated by reference
to the document filed by Apache pursuant to Rule 14A, Commission File No. 1-4300).
 
 *
    
    Filed herewith. b.
    
    Reports filed on Form 8-K.No reports on Form 8-K were filed during the fiscal quarter ended December 31, 2005.
 35




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##### Table of Contents



SIGNATURES
  APACHE OFFSHORE INVESTMENT PARTNERSHIPBy:
    
    Apache Corporation, General PartnerDate: October 11, 2006
    
    By:
    
    /s/ G. Steven Farris

G. Steven FarrisPresident, Chief Executive Officer and
Chief Operating Officer
  Name
    
    Title
    
    Date/s/ G. Steven Farris

G. Steven Farris
    
    Director, President, Chief Executive Officer and Chief Operating Officer (Principal Executive Officer)
    
    October 11, 2006/s/ Roger B. Plank

Roger B. Plank
    

Executive Vice President and Chief Financial Officer (Principal Financial Officer)
    
    October 11, 2006/s/ Thomas L. Mitchell

Thomas L. Mitchell
    
    Vice President and Controller (Principal Accounting Officer)
    
    October 11, 2006




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##### Table of Contents



Name
    
    Title
    
    Date*

Raymond Plank
    
    Chairman of the Board
    
    October 11, 2006*

Frederick M. Bohen
    
    Director
    
    October 11, 2006*

Randolph M. Ferlic
    
    Director
    
    October 11, 2006*

Eugene C. Fiedorek
    
    Director
    
    October 11, 2006*

A. D. Frazier, Jr.
    
    Director
    
    October 11, 2006*

Patricia Albjerg Graham
    
    Director
    
    October 11, 2006*

John A. Kocur
    
    Director
    
    October 11, 2006*

George D. Lawrence
    
    Director
    
    October 11, 2006*

F. H. Merelli
    
    Director
    
    October 11, 2006*

Rodman D. Patton
    
    Director
    
    October 11, 2006*

Charles J. Pitman
    
    Director
    
    October 11, 2006*

Jay A. Precourt
    
    Director
    
    October 11, 2006
 
 *
    By:
    /s/ Roger B. PlankRoger B. PlankAttorney in Fact October 11, 2006




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##### Table of Contents



Exhibits3.1
    
    Partnership Agreement of Apache Offshore Investment Partnership (incorporated
by reference to Exhibit (3)(i) to Form 10 filed by Partnership with the Commission
on April 30, 1985, Commission File No. 0-13546).3.2
    
    Amendment No. 1, dated February 11, 1994, to the Partnership Agreement
of Apache Offshore Investment Partnership (incorporated by reference to Exhibit 3.3
to Partnerships Annual Report on Form 10-K for the year ended December 31, 1993,
Commission File No. 0-13546).3.3
    
    Limited Partnership Agreement of Apache Offshore Petroleum Limited
Partnership (incorporated by reference to Exhibit (3)(ii) to Form 10 filed by
Partnership with the Commission on April 30, 1985, Commission File No. 0-13546).10.1
    
    Form of Assignment and Assumption Agreement between Apache Corporation
and Apache Offshore Petroleum Limited Partnership (incorporated by reference to
Exhibit 10.2 to Partnerships Quarterly Report on Form 10-Q for the quarter ended
June 30, 1992, Commission File No. 0-13546).10.2
    
    Joint Venture Agreement, dated as of November 23, 1992, between Apache
Corporation and Apache Offshore Petroleum Limited Partnership (incorporated by
reference to Exhibit 10.6 to Partnerships Annual Report on Form 10-K for the year
ended December 31, 1992, Commission File No. 0-13546).10.3
    
    Matagorda Island 681 Field Purchase and Sale Agreement with Option to
Exchange, dated November 24, 1992, between Apache Corporation, Shell Offshore, Inc.
and SOI Royalties, Inc. (incorporated by reference to Exhibit 10.7 to Partnerships
Annual Report on Form 10-K for the year ended December 31, 1992, Commission File No.
0-13546).23.1
    
    Consent of Ryder Scott Company, L.P., Petroleum Consultants (incorporated
by reference to Exhibit 23.1 to Partnerships Annual Report on Form 10-K for the
year ended December 31, 2005, Commission File No. 0-13546)*31.1
    
    Certification of Chief Executive Officer.*31.2
    
    Certification of Chief Financial Officer.*32.1
    
    Certification of Chief Executive Officer and Chief Financial Officer.99.1
    
    Consent statement of the Partnership, dated January 7, 1994 (incorporated
by reference to Exhibit 99.1 to Partnerships Annual Report on Form 10-K for the
year ended December 31, 1993, Commission File No. 0-13546).99.2
    
    Proxy statement to be dated on or about March 27, 2006, relating to the
2006 annual meeting of stockholders of Apache Corporation (incorporated by reference
to the document filed by Apache pursuant to Rule 14A, Commission File No. 1-4300).
 
 *
    
    Filed herewith. b.
    
    Reports filed on Form 8-K.No reports on Form 8-K were filed during the fiscal quarter ended December 31, 2005.